1. We had all predicted that ministerial portion of the Open Skies conference would become significant because of its unique positioning of key players at a key time in history. Three-line full page headline of NY Times 14 Feb more than vindicates prediction: “Accord in Ottawa: West and Soviets Agree with Two Germanys on Rapid Schedule for Unification Talks: Gorbachev Accepts Bush’s Troop Ceiling.”

2. Ottawa meeting has obviously been unique venue for countless high level behind-the-scenes negotiations and conversations, many involving SSEA and PM . Baker and Shevardnadze, for example, had five separate negotiating sessions on Tuesday. SSEA and Shevardnadze had six hours of discussion during bilaterals on Wednesday alone. This telegram attempts to provide some of the more central assessments that were made privately to Canadians in last several days, or to others as reported to us, to inform your own discussion and analysis of events, bearing in mind that Canada is not to be a mere observer of what is taking place but a participant in the process, with views to offer, and interests to advance.

3. This telegram will not be about Open Skies. That part of conference is proceeding very well. Idea was applauded by ministers as most important confidence-building measure yet and though differences of approaches remain, there is every likelihood they will be settled in time for a treaty to be presented to ministers in Budapest in May. This will be a very considerable accomplishment. As PM put it privately, a treaty is a tangible proof of achievement and progress, and we Canadians should press and press to ensure its importance is appreciated so that this achievement is realized.

4. It would be obvious to say that it was issue of German unification which dominated Ottawa meeting. Certainly this was all that Genscher had on his mind and the driving home in corridor negotiations of the “2 plus 4” formula for its discussion with other countries was very major accomplishment (though tarnished by vivid and bitter contestation in NATO caucus of the unfortunate wording of its mandate.)

5. But to USA and USSR, the hurtling of events in Germany toward de facto unification in only several weeks’ time was part, albeit major part, of bigger tableau of unpredictability and instability which is even more major preoccupation. As Shevardnadze put it to SSEA, “situation is so complex, so urgent, and so dangerous”. It is search for predictability and stability while accommodating forces of democratization and reform which characterises the two great powers policy objectives. It is clear that they will work together in this search. Our talks with Soviets and Americans alike reveal unprecedented level of cooperation, and from USA side strenuous effort to support Gorbachev and (Shevardnadze) politically.

6. Baker and his colleagues stressed in private discussion that while Gorbachev is secure in his control, the USSR is imploding. Government can probably cope, but not if it is subject as well to external pressures. Shevardnadze had stressed to both Baker and Genscher the shock of having been criticized by the central committee for recent USSR “losses”. “What are you doing with our security”, conservatives are saying. Unification of Germany is by far the most explosive development in view of these critics.

7. USA is therefore determined to watch its language in describing USA-USSR relations. Soviets made a fundamental shift in Ottawa bilateral talks in accepting Bush force reduction formula in that it is asymmetric both in cuts and in end results. But they made it clear that this was not a concession. What USA side understood from that is that it would provide unacceptably volatile fuel to Moscow conservative critics if it were. USA purpose is to establish “dignity” in bilateral relations for that reason, as two sides build toward June bilateral summit with an intensity in political level discussion that is without precedent (2 more major Baker-Shevardnadze negotiations between now and June).

8. In many respects, sensitivity to USSR interests is the driving reason behind 2 plus 4 formula for handling the unification of Germany. Everyone accepts that unification is up to the Germans; it will take place and almost immediately after the 18 Mar GDR elections. The question is its political packaging as well as the need to find a formula for the controversial external aspects.

9. As Genscher put it to NATO caucus, Shevardnadze was “certainly not shy” in describing Soviet public sentiment on the issue. To SSEA, Soviet FM said “leaders of FRG seem to understand they have gone too far.” Shevardnadze had impression that FRG partisan political process was in some respects forcing events as three FRG parties view to outdo each other with escalation of promises. Genscher in his private conversations places stress on haemorrhaging conditions in GDR. Exodus is now at 3,200 a day; most basic public services are jeopardized. Genscher was man driven at Ottawa conference by historical feat of achieving unification. His explanation for urgency rang true, as did his satisfaction as a German statesman, but his instincts as party politician were not wholly obscured, and as Woerner candidly acknowledged at private dinner hosted by Associate Defence Minister Collins, both CDU and FDP have to work hard to compensate for obvious advantage held among GDR voters by SDP.

10. Point of these internal FRG political points is that we are told Gorbachev and Shevardnadze are themselves going out of their way to understand them. They are reasoning like politicians now because like all the others at Ottawa conference from Eastern Europe (except Fischer) they now have to. But they expect their own domestic political interests to be respected by political process. Shevardnadze put it to Baker on issue of unification, “we have to be participants, not victims.”

11. This was central impulse for creating 2 plus 4 and its importance for USSR explains why NATO allies were prepared to tolerate complete absence of consultations. Both Hurd and Baker seemed prepared to recognize that a gaffe had been committed over mandate for the foreign ministers of five (GDR becomes academic) to discuss “the issues of security of the neighbouring states.” They offered in NATO caucus at SSEA urging to ensure close ongoing consultation in NATO but Genscher was indignant and uptight about the issue. This may only mean that 2 plus 4 solution was still very fragile. Our impression is that USA-USSR formula that “internal aspects of unification are entirely up to Germans while external aspects need to be discussed with others” is going to be harder to agree upon with both USSR and German partners in practice than in theory. Dutch FM (supported most strenuously by Italian, Belgian, Norwegian) asked, “if it is a question of Polish borders only, why not say so?” There was no satisfactory answer, and since Genscher has made it very clear FRG will confirm current eastward borders expeditiously, there is potential for 2 plus 4 to be used for much more. Genscher needs it to finalize unification itself in rapidly changing landscape.

12. Question is whether it will also be used to pre-negotiate relationship of unified Germany to NATO as this relates to all of the other central security questions. This unanswered (probably unanswerable) question had non-participating NATO foreign ministers worried but fact remains that tacit purpose of 2 plus 4 is to give USSR entree to process with all of the preoccupations they bring to bear and way this plays out is hard to predict. French would argue (point made to us by Political Director Dufourq) that there was nothing to negotiate with USSR on issue, since they had no leverage. However, USA preoccupation with USSR leadership comfort levels would suggest using 2 plus 4 as forum for arguing out at least respective points of view on stationed foreign forces and possibly more.

13. President Bush said in his press conference 11 February, “I suspect, though I cannot prove it, that some of the WTO countries want us in Europe: not as a threat, but as a stabilizing factor”. From what was said privately and publicly here in last few days, President Bush’s suspicion is probably right. Shevardnadze said to SSEA that he would see USA and Canada and USSR troops all out of “Europe” by 1995 and by year 2000 all forces in Europe on a nationally-stationed basis and with a defensive posture. But he also said to SSEA “we are not afraid of Canada but of Bundeswehr”. He made it clear it was not with his friends Genscher and Kohl at helm that Russians had this fear but with view to decade or so hence. All of this to suggest that process of German unification has deepest political and security preoccupations for USSR. Emotional memories of WW II are political reality. They will seek satisfaction on fundamental issues, probably in two plus four grouping.

14. This may well have implications for NATO in terms of established institutional prerogatives and process and it will have to be worked out as a NATO matter.

15. NATO fretting on this point is ironic counterpoint to most frequently made Ottawa conference joke. As WTO delegations inadvertently and repeatedly wandered into NATO caucus meetings to retrieve briefcases, or Shoppers Drug Mart purchases, left at previous session, they ritualistically intoned when they realised where they were, “We are joining, but not quite yet.”

16. In public debate, WTO members at conference were relatively restrained. Plenary debate was remarkable in that almost all of the speeches from WTO and NATO used same speech-writers lexicon of political phrases about rights, democracy, openness, stability, security, etc. and for once words used meant the same to all the users. Privately, WTO delegations (except for hapless East Germans) acknowledged WTO was finished. Publicly they continued to refer to value of alliances for accelerating force reductions and arms control. To the extent that they can indulge in long-term thinking, they see arms reduction activity shifting toward an alliance-free forum, a new CSCE, but as Dienstbier put it privately, he and others can hardly strategize past the end of each week. Shevardnadze spoke eloquently to SSEA about the serious disconnect in timing in Eastern Europe and the USSR between political reform and economic reform. The economic reform task is much more enormous and difficult than Westerners think, he said. Laws have to be re-written, debated, approved on such fundamental issues as the nature of property. Even more significant is the established command economy network both between the USSR and the COMECON countries and within the USSR itself, which is a lot easier to wish away than to actually replace. The real problem here is frustrated expectations, a basic ingredient of the dangerous instability which so troubled the USSR internally and externally. These realizations no doubt tempered behaviour of the other foreign ministers from Eastern Europe, who (except for Poles and Czech undercutting of Karpov during negotiations on Open Skies communique) did not take issue with the USSR (except perhaps for Czechoslovakia), bearing in mind perhaps that it was Gorbachev and perestroika which had helped put them here.

17. However, all accepted that Ottawa conference represented a new departure in attitude and direction. The question is where will it lead.

18. Given that stability and predictability are the goals, and that existing institutional structures are in flux or in case of WTO virtually defunct, tendency is to think ahead to an englobing security framework which seems to be a more muscular and more effective CSCE.

19. All delegations here were in favour of a CSCE Summit before end of 1990 – virtually all anticipated signature of CFE Agreement to be a prominent achievement of summit. But there was a range of views as to substantive preparation of summit, substance to be expected from summit, and thus from renewed CSCE itself.

20. As you know, USSR position has been in favour of “institutionalizing” the CSCE process, which seems to mean giving it ongoing secretariat and member state presence and functions to propel negotiation, consultation, and programs in political security, social, economic, and environmental areas. Shevardnadze told SSEA they saw the summit identifying the CSCE as the successor agency for the CFE I process and as the locale as well for consolidating the final post-WW II settlement process. The summit should set a mandate to enable the CSCE to encourage and eventually to codify the conversion of states to defensive military postures, as well as to engage in the other critical economic, social and environmental adjustment activities.

21. Deeper Soviet interests were also acknowledged. Shevardnadze spoke with reference to German unification of the importance for stability of USA and Canadian presence in the CSCE. He wishes to “accelerate the process of englobing structures in the CSCE.” USA officials told us that in their view USSR is also looking to stable pluralistic framework of CSCE as sort of counter to Federal instability within USSR itself. USA considers this a serious concern and will probably upgrade their own creative attention to CSCE potential in consequence. USA officials privately accept inevitability of an institutionalized CSCE.

22. Genscher also spoke of CSCE as locale for next phase of conventional weapons negotiations and as “permanent stage” for disarmament process. On unification, FRG is going to report to CSCE Summit on details, but does not intend any discussion or negotiation there, which, of course, remains to be seen re external aspects.

23. French too see CSCE as useful to englobe changing security situation but our conversations with Dufourq do not reveal much in way of French thinking regarding any substantive ongoing role for CSCE itself apart from preparing 1992 FU2 meeting. Other delegations including Canada do not wish to disrupt or replace 1992 meeting but believe events require concrete strengthening of CSCE before then. French views are probably unexpressed pending EC discussion and settlement of Paris-Vienna venue contest (Paris will win; [other] delegations cannot swallow even proximity of Waldheim to summit of this character.) Surprisingly, Hurd foresaw quite considerable security role for new CSCE including notion of conflict resolution mechanism which interested SSEA.

24. These divergent views on CSCE need urgent reconciliation, at least to point where a preparatory process for summit can be identified. There were various proposals for an officials prepcom, use of Vienna CSBM forum, ministerial meetings either on the margin of Budapest Open Skies finale, or Copenhagen Human Dimension conference or a special prepcom at separate ministerial meeting. SSEA in chair at both impromptu NATO caucus and closed session of 23 [on] 13 February was not able to draw out a very open discussion of positions we know existed.

25. Tendency now will be for serious official discussion to proceed on all these issues in various venues: bilateral, 2 plus 4, and EC 12, and only then in NATO, though summit seven sherpa meetings may provide opportunity.

26. For these reasons, steps by posts to dialogue at most senior levels of host governments will be important. There is considerable credit available from Open Skies host functions and SSEA leadership to draw upon. You will have read PM and SSEA statements to Open Skies plenary. As general supplementary guidance, we would add that a reinforced and more effective CSCE process is very much a Canadian objective. SSEA found in discussion with Shevardnadze there is much Canada and USSR shared on this issue and on proposals for an active preparatory process. We shall provide more specific guidance on CSCE and on other issues shortly.

27. This telegram is to try in haste to return some very tentative analysis to those of you who have so thoughtfully contributed in recent months to our understanding of these truly momentous issues, and specifically to preparation of this very important meeting of 23 ministers which has, we think it fair to say, worked out very well. Accurate and substantial political understanding of the various needs and positions at play in the unfolding of these events will now be needed more than ever if Canadian opportunities and interests are to be aptly assessed and advanced. We count on your contribution and we shall do our best to ensure you are well positioned in regard to thinking here. More detailed and factual reports on specific meetings and sessions are, of course, going out to those concerned in usual way.